Same lecture, different day.
This was for newbies more or less. Adiel makes some great points, but does he need 2.5 hours to make them in? :)
He talked about a possible Go-Zone extension.
The markets he suggested this time are Oklahoma, Raleigh, Huntsville, Dallas, Biloxi, Lafayette, Houston. Said they seem cheap compared to other markets, such as Phoenix, CA, and LV. Whatever sounds boring now (but is in the sunbelt) is where to invest.
He again made the point about renting his 5.5K rental house instead of buying the type of property he lives in (multi-million dollar).
It was a good crowd, about 100 people. He is promoting an advanced day Sept 8th, for $30 per person (call me if you're intersted in signing up together).
He recommends buying single family homes over duplex or apartments, as the neighborhoods they're located in have higher appreciations. Says apartments are only worth it for 150 to 300 units since you can get economies of scale.
He talked again about what qualifies to be a RE professional, how to get full benefits out of the GO zone. He gave his usual example of buying a house to pay for a child's college, and also about how mortgages in this country are a huge gift (as they don't let the bank even keep up with the cost of inflation). He says he's tried it all, but come back to SFRs in the end.
The question of absorbing vacancies, bad property mangaers, dealing with tenants, etc. remains. Many people buying through ICG do well, as long term holds. The markets he recommends are not the sexy or hot ones.
He suggests a 10 year hold time, as always. Part of my problem seems to be visualizing anything about my life 10 years out. I can barely picture 2 years from now! Who knows what 10 years from now looks like.
7 comments:
Hi Reenu,
I have not heard of a Go Zone extention. I see he mentioned the Biloxi area as an alternative to the higher priced property areas. Did anyone seem interested in recieving more information as to what is available here on the Mississippi Gulf Coast?
Hi Lewis?
Yes, people are always interested. ICG does tours in the area and has relationships with agents and property managers. But in general people are still quite interested in that area due to the bonus depreciation (50%).
The areas for GO-Zone extension are the big cities like New Orleans, Mobile. I didn't catch all the cities he mentioned.
There is probably a good websit for it...I'll look & try to post later.
The other interesting thing I learned recently is of a new piece of legislation that gives investors who build new homes a $30K forgiveable loan. More details to come on that...
Hi Reenu, This is John Davis's wife here. I also have been a full time investor for about 3 years now. As you know we just moved from Bay Area to Dallas TX. I have attended ICG seminars couple of times and I used the same CPA as Adiel. His stredigies are to buy pretty homes and hold them for long-term or mid-term rentals. But most of the areas they buy are not really easy to find tennants and this results in negative cashflow on average at the end. Besides they don't personally manage the properties for you and you have to reply on the their recommended Property Mgr who often gets the kickback from your maintanance bills. The true local investors buy 20% below the market values. Give me a call when you have a chance. I would like to shre with you about my out-of-state investment experiences and knowledges. Rachel 408-431-2980 or 972-618-1727
Thanks Reenu for the summary. It is much better to read you summary than to spend 2.5 hours sitting at the seminar :)
Reenu,
For those with questions about the extension for Go-Zone, the fact is that they are looking into it. One of the reasons HUD approved the forgivable loan is because Congress is getting frustrated with the lack of people qualifying for go-zone as even CPA's are not up to par on the criterias. As of right now, the deadline to have a completed home and qualify for go-zone is Dec. 31, 2008. There have been talks about an extension beyond the end of 2009 but just like anything, I'll believe it when I see it.
IMO, Biloxi is something to where people should not be sold on the fact that they will get cash flow just because it's Biloxi. Land prices are high, and it will take several years to get the occupancy rate in the casinos to where people are promising as agents. The key is finding the cheaper land in the HUD zones...Why? HUD only approved 4 counties for this. They allocated $262 million for this incentive. People are GOING to start buying. Go where the land is cheap. I think you know where that is ;)
Rachel said "The true local investors buy 20% below the market values."
Hi Rachel! So nice to see you! I am automatically suspicious of all home prices promised to invesment clubs these days. They don't see to really be below market. Investors should always seek 2nd and 3rd opinions and do their own local intelligence gathering. RE is a very local phenomenon, so not having current, recent information on your investment area spells troube.
It is very risky business to be putting your hard earned money into the hands of people you just met at a seminar.
Ask me how I know.
Hi Scott!
Thanks for the clarification on the extension issue. Legalese...we'll believe it when we see it.
>IMO, Biloxi is something to where people should not be sold on the fact that they will get cash flow just because it's Biloxi.
I have to agree. Biloxi is beautiful but hasn't it been overbuilt already? Seems that many casinos are going on line, but the permanent residences may not really have that much of a role to play. High condo prices can't be absorbed by the locals. There is a need for affordable housing in the area, not just any housing.
>Land prices are high, and it will take several years to get the occupancy rate in the casinos to where people are promising as agents. The key is finding the cheaper land in the HUD zones...Why? HUD only approved 4 counties for this. They allocated $262 million for this incentive. People are GOING to start buying. Go where the land is cheap. I think you know where that is ;)
Scott - do you happen to know the range of prices for parcels there right now? Land is a very risk investment if you don't know what you're doing. It could turn into a dead end. The master plan by the cit of Biloxi should reveal some goodies.
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